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Introduction Visor was incorporated in 2009 after a successful 2007 acquisition and subsequent merger of the largest worksite benefits agency in Washington by Gateway Benefits, established in 1995 by Bill Hill. The purpose of the merger was designed to add core competencies to both agencies so as to adequately address the coming changes imposed by healthcare reform. Visor now has decades of experience in the employee benefits industry working with clients nationally from its Midwest and West Coast offices.

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Group Insurance Design Flaws Can only accommodate the mean of the largest population Assume all employees have the same need for benefits or desire for good health Plan options encourage utilization Employees are shielded from accountability as low out of pocket plan designs remove cost of care decisions There are no penalties for poor health decisions Insurance companies have become finance based profit models and have no incentive to lower cost One year rate guarantees limit budget management Demographic shift eventually destroys health insurance model

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Penalties The current health insurance proposition is commonly referred to as Pay or Play. < 50 No Penalty > 50 Penalty applies ACA budget includes $13 Billion in fines per year. -Congressional Research Service Report-May 6,2013

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Form 8928 Confessional submitted to the IRS when you fail to submit proper notification to the employees. Form 8928 Compliance Failures The compliance failures triggering penalties include the following: COBRA violations. HIPAA portability. Comparable contribution requirements for health savings accounts (HSAs) and Archer Medical Savings Accounts (MSAs). Health care reform mandates: discrimination rules (temporary penalty non-enforcement) coverage of adult children to age 26 and initial notice elimination of lifetime and annual dollar limits on coverage and initial notice (phase-in complete in 2014) prohibition of coverage rescissions remove pre-existing condition limits for participants younger than 19 (applies to all participants beginning in 2014) new claim and appeal rules, including external review requirement requirement of the 4-page summary of benefits and coverage (SBC) (effective with open enrollment for 2013) preventative care with no co-payments or other charges rules on access to primary care providers and emergency room (patient protections) maximum waiting period of 90 days for eligibility (plan years beginning January 1, 2014 and later) Shared responsibility (pay-or-play) mandate (plan years beginning January 1, 2014 and later).

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Visor still recommends Pay or Play… but a different game!

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INTRODUCING BetterFits TM

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History of BetterFits The design of the BetterFits program began as a response to a failing group health plan. The Employer was paying $841/month for a $5,000 deductible group health plan and facing another 24% increase. Participation had dropped below 50% and the plan was now in jeopardy of cancellation. This event is commonly known in the industry as a death spiral. With knowledge of a regulation change in 2007, Visor suggested the Employer offer a credit for employees to use toward the purchase of a benefit program. The credit was determined by the Employer and based on the average premium needed to purchase coverage. The total employee credit was 75% less than the annual group policy premium and allowed the Employer to offer every employee the same level of benefits. Individual medical policies were offered in a cafeteria style which allowed employees to personally design their program. In 2008, the BetterFits program was brought to full fruition when Visor developed a system to easily process payments of individual medical policies to multiple carriers. Since then, the program has been expanded to include a flex plan to allow employees to fully develop a comprehensive personalized plan.

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Small Regulation Change Secretary of Treasury published a small regulation change in August 2007 which made individual medical plans eligible for Section 125 reimbursement (m) Payment or reimbursement of employees individual accident and health insurance premiums(1) In general. The payment or reimbursement of employees substantiated individual health insurance premiums is excludible from employees gross income under section 106 and is a qualified benefit for purposes of section 125. (2) Example. The following example illustrates the rule of this paragraph (m): Example. Payment or reimbursement of premiums. (i) Employer Ps cafeteria plan offers the following benefits for employees who are covered by an individual health insurance policy. The employee substantiates the expenses for the premiums for the policy (as required in paragraph (b)(2) in § 1.125–6) before any payments or reimbursements to the employee for premiums are made. The payments or reimbursements are made in the following ways: (ii) The cafeteria plan reimburses each employee directly for the amount of the employees substantiated health insurance premium; (iii) The cafeteria plan issues the employee a check payable to the health insurance company for the amount of the employees health insurance premium, which the employee is obligated to tender to the insurance company; (iv) The cafeteria plan issues a check in the same manner as (iii), except that the check is payable jointly to the employee and the insurance company; or (v) Under these circumstances, the individual health insurance policies are accident and health plans as defined in § 1.106–1. This benefit is a qualified benefit under section Federal Register/ Vol. 72., No. 150 This one change opened up Defined Contribution plans to smaller companies since it eliminated the actuarial need for thousands of employees.

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How BetterFits Works Visor provides direct support and helps educate employees to become skilled risk managers. The benefit options can include any qualified insurance products.

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Funding Design Examples of credit offering: Flat Amount per month Low flat amount + age actuarial table Flat amount for employee + flat amount for children This design is not restricted but some standardized classification is recommended.

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The Bronze Trap Every employer will be required to provide a baseline benefit equivalent to the Bronze plan design in the Exchange. The minimum Bronze plan design must maintain a 60% Actuarial Value(AV) and can have a deductible no greater than $2000. Any lesser benefit offering by an employer shall make the employees eligible for the Exchange. Employees receiving a credit for the coverage in the Exchange shall subject the employer to a $3,000 tax(fine). As rates explode in 2014, employers will be left with no benefit adjustments to ameliorate increases. At that time, the only choice will be to pay the increase, pay the fine or both. PPACA created a new distribution channel known as Navigators. Navigators are non- profit, unlicensed, non-professional advisors whose single purpose is helping the insurance buying public apply for credits to join an Exchange.

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Plan Design Every group plan offered must meet the 60% Actuarial Value or Minimum Value plan design. In many cases, employers will be forced to purchase more expensive plan designs and left with few choices to reduce future increases as premiums rise.

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Limits on Premium Profit Insurance Companies profit margins have been limited to 15% for group medical and 20% for individual medical. Only question to ask is: Will the insurance company make more money on a $500 monthly premium or $1,000?

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Cadillac Tax This 40% Excise Tax on amounts over $10,200 will eventually be paid by everyone if their plans just receive normal rate increases.

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Community Rating Rates can only be differentiated by: Geographic area Age with 3:1 limit Smoking Status with 1.5:1 limit Family status Younger employees will elect not to participate, pay the tax and only elect coverage on their way to the hospital. There is no way to police smoking status. The regulations allow up to 4 occasions to use tobacco and still be declared a non-smoker. How does the insurance company enforce premium compliance?

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Industry Fees passed on to Consumers Insurance, Pharmacy and Durable Medical Equipment companies all have to pay a progressive, non-deductible fee to the Federal Government every year. The insurance fee in 2014 by itself will add $50 to the annual cost of every policy. This fee is scheduled to increase every year.

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Audits & Litigation DOL is staffing up and performing document audits- very easy audit as the DOL simply sends a letter requesting plan documents. If you do not have them available, DOL sends you a bill. IRS has staffed 700 positions and is planning to hire another 300 to audit. Part of the planned funding for ACA is an estimated $10 billion in fines the Government will collect though audits. Tax lawsuits are pending. Any S-Corp or LLC will be forced to pay a tax on a tax if penalized for a non-compliant health plan.

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Regional Renewal Adjustment The annual allowed increases will be based on national averages set by HHS. The annual increases will fall disproportionately on low cost States like Missouri.

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Rate Shock The new law and regulations will act as an inflationary catalyst. Premium growth rate will be exponential as the majority of States will experience a significant rate increase next year(80-100%) with normal renewal increases thereafter. Law never addresses the cost of coverage Aetnas CEO, Mark Bertolini, has publically stated that rates in some markets will go up by 100% Anthems CEO, Steve Martenet, stated in a local meeting that he expects a 80% rate adjustment